Selling to the greatest fool is the last stage of a bull market.

Selling to the greatest fool is the last stage of a bull market. The flight to quality and the DOW is also part of it. The direction of the market is based on six months in the future not the earnings report of today. QE2 showed up on the corporate balance sheet as low cost credit and improved earnings by improving operating margins. The end of QE2, rising energy costs, and the return to sane federal budgets will pop the QE2 bubble. But worst of all the labor market, the housing market has not improved, and the credit and health of the US Treasury is weakening with the dollar falling and China not buying American Junk debt. In fact all three are getting worse.

 Mar 29 Case-Shiller 20-city Index Jan fell 3.1%. US single family home prices fell for the seventh straight month bringing prices down to the April 2009 lows.
 Mar 30 ADP Employment Change Mar 201K dropped 7K to 16K from last month which over 9K forward by revising last month down to 208K from the original 217K Quote. Either way the new job creation shrunk at least 7K to 16K
 Mar 28 Treasuries fell as the government sold $35 billion of two-year securities at the highest yields in almost a year on concern the Federal Reserve will lose control of interest rates as soon as QE2 ends because other countries do not want to fund the Obama $trillions in deficits. The dollar tumbles to a new low.

This is the time when GE/MSNBC/Pravda and Jimmy Cramer get the greatest fools to buy stocks to help their leaders like GE-Soros-Obama look good. This is the time to take profits. Today the reports from the labor market will determine if the sell-off resumes or not.

Treasuries fell as the government sold $35 billion of two-year securities at the highest yields in almost a year on concern the Federal Reserve will lose control of interest rates as soon as QE2 ends because other countries do not want to fund the Obama $trillions in deficits. The cost of borrowing to support Obama spending on ACORN, Rev. Wright, and Black Panther type objectives is increasing.

World Markets:
Poland’s public debt rose to 53 percent of economic output last year yet still did not trigger any austerity measures, according to the Deputy Finance Minister. After all Japan has been over 100% for a decade.

European confidence in the economic outlook worsened in March but not nearly as much as reported in America on Tuesday. Surging energy costs, nuclear radiation, and Japan’s earthquake threatens global growth. The index of executive and consumer sentiment in the 17- nation euro region slipped to 107.3 from a revised 107.9 in February.

China's stock market prices are in a triangle formation going nowhere and will breakout probably within a month. At this point we believe the breakout will be down because most of the world is tightening belts now and letting interest rats rise to slow demand for debt. Higher rates will put extreme pressure on countries like the "PIIGS", Portugal, Ireland, Iceland, Greece, and Spain. Spain will be the next to fall and beg for a bailout because socialist unions will riot if they don't. The contagion is spreading in the EU. China fell both today and yesterday while most of Asia rose. This is evidence of a breakout of their market beginning on the downside.

US Market Highlights
Latest reports out
Personal Income rate for Feb dropped to 0.3% from 1.2% last month.
Personal Spending increased in Feb by 0.7from 0.3% last month.
PCE Prices - Core inflation in Feb was 0.2%/mo (2.4%/yr) up from 0.1%/mo or 1.2% last month.
Pending Home Sales Feb rose 2.1% offsetting most of the decline of -2.8% last month

Mar 29 Case-Shiller 20-city Index Jan fell 3.1%. US single family home prices fell for the seventh straight month bringing prices down to the April 2009 lows.
Consumer Confidence Mar plummeted steeply to 63.4 from 70.4 last month, a new three-month low.

Mar 30
MBA Mortgage Index 03/25 fell -7.5% after being up +2.7% last week
Challenger Job Cuts Mar down -38.6% canceling more than the 20% increase last month.
ADP Employment Change Mar 201K dropped 7K to 16K from last month which over 9K forward by revising last month down to 208K from the original 217K Quote. Either way the new job creation shrunk at least 7K to 16K depending on how fraudulent the Obama team chose to be.
Crude Inventories 03/26 up slightly to 2.945M from 2.131M

This week's upcoming reports

Mar 31 8:30
Initial Claims 03/26
Continuing Claims 03/19
Chicago PMI Mar
Factory Orders Feb

Apr 1 8:30 AM Nonfarm Payrolls Mar
Nonfarm Private Payrolls Mar -
Unemployment Rate Mar
Hourly Earnings Mar
Average Workweek Mar
ISM Index Mar
Construction Spending Feb
Auto Sales Apr
PM Truck Sales Apr

Market Outlook March 31, 2011
China fell both today and yesterday while most of Asia rose. This is evidence of a breakout of the triangle formation beginning on the downside.

The rise in the DOW is the indication that the there is a flight to safety going on as the DOW came within 2% of its previous high. The DOW could match the previous high but all the other indicators show a head-and-shoulders sell formation is still under way.

Wednesday buying volume was almost average. The VIX trend fell back to normal but began to increase at the end of the day.

The 50dma broke both ways, which frequently happen at the beginning of a decline before the upper resistance level firms up confirming at least an intermediate range decline.

World Markets
International trade shows that the world economy has only revived about 25% not the 60% shown by the stock and commodities markets. That means 60% of the stock market rise from the 2009 lows could evaporate as the initial rise evaporated under Jimmy Carter. See:
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Except for China, Asian markets were up last night. China down -0.9%, Hong Kong up 0.3%, India up 0.8%, and Japan up 0.4%.

European markets are down this morning in a range of about -0.1% to -1% half way through their day.

US pre-market futures are flat at about 0.1 % at 7:30 AM EST.